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House Explores Wasteful Spending in Iraq

February 6, 2007 at 9:26 AM EDT
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JUDY WOODRUFF: Today’s hearing, called by the House Oversight and Government Reform Committee, focused on the way the Coalition Provisional Authority, or CPA, under Paul Bremer managed billions of dollars in Iraqi funds in 2003 and ’04.

New chairman, Democrat Henry Waxman of California, has pledged tougher oversight of the Bush administration. Today, he charged that the CPA failed in its oversight of Iraqi funds, which had been held in dollars in a U.S. federal bank.

REP. HENRY WAXMAN (D), California: In a 13-month period from May 2003 to June 2004, the Federal Reserve sent nearly $12 billion in cash, mainly in $100 bills, from the United States to Iraq. To do that, the Federal Reserve Bank in New York had to pack 281 million individual bills, including more than 107 $100 bills, on to wooden pallets to be shipped to Iraq.

The cash weighed more than 363 tons and was loaded onto C-130 cargo planes to be flown into Baghdad. The numbers are so large that it doesn’t seem possible that they’re true. Who in their right mind would send 360 tons of cash into a war zone?

But that’s exactly what our government did. My concern is that, without strong standards, we have no way of knowing whether the cash that was shipped into the Green Zone ended up in enemy hands.

Defending Iraq spending

JUDY WOODRUFF: But Republicans were quick to fire back that Democrats were revisiting old news to attack the administration. Tom Davis of Virginia is the committee's ranking Republican.

REP. TOM DAVIS (R), Virginia: The main value in revisiting past mistakes is to make sure that the right lessons have been learned and corrective actions put in place. Self-righteous finger-wagging and political scapegoating won't make Iraq any more secure; it won't rebuild that ravaged nation; and it won't bring the U.S. troops home any sooner.

JUDY WOODRUFF: Former Administrator Bremer defended the CPA's handling of the money, saying he did his best to kick-start a struggling economy, which was cash-based and had no real banks.

L. PAUL BREMER, Former Administrator, Coalition Provisional Authority: It is difficult, Mr. Chairman, to give a full picture of the desperate situation in Iraq in May of 2003. The country was in chaos, socially, politically and economically. The deep crisis had been brought about not by war, not by sanctions, but by decades-long corruption and incompetence of the Saddam regime.

Our top priority was to get the economy moving again. The reconstruction job proved to be harder than anticipated because, as some members have pointed out, prewar planning had not anticipated the difficulty of the tasks we faced.

My colleagues and I, Mr. Chairman, fully understood and accepted our responsibility for the temporary stewardship of these Iraqi monies. We took seriously our charge to operate in an open and transparent fashion and to use these Iraqi funds in the best interests of the Iraqi people.

We always strive to meet those objectives, and where we may have fallen short, I accept responsibility.

JUDY WOODRUFF: Seated next to Bremer was the special inspector general for Iraq reconstruction, Stuart Bowen. In 2005, he found that $8.8 billion in Iraqi funds could not be accounted for.

STUART BOWEN, U.S. Special Inspector General: We concluded that more should have been done to find out what the Iraqi ministries were doing with the $8 billion, $8.8 billion, that had been dispersed to them for use to pay salaries, administrative expenses, and other expenses, operational expenses.

Disagreement on use of oversight

JUDY WOODRUFF: Under questioning from Representative Davis about the feasibility of enacting oversight in a war zone, the testimonies of Bowen and Bremer were often at odds.

REP. TOM DAVIS: You obviously made adequate disbursements, you asked for accountability. You had to do this retroactively, because the money had to get out there. And, Mr. Bowen, do you agree with that?

STUART BOWEN: If you disburse the money, you ought to have some -- and I don't mean Wall Street or whatever standard anyone wants to and just something that provides feedback to the interim government about how that money was used. And as our audit indicates, what that something was, the ministry said, yes, we received this money. Yes, we expended it. The level of detail beyond that, as the president of the Board of Supreme Audit has told me, is virtually nonexistent.

PAUL BREMER: Of course, I agree the ideal that the inspector general lays out would be desirable. But we were in the middle of a war, working in very difficult conditions, and we had to move quickly to get this Iraqi money working for the Iraqi people.

De-Baathification

JUDY WOODRUFF: Democrats asked about other decisions made by Bremer, the qualifications of Coalition Provisional Authority or CPA personnel hired under his administration, the wisdom behind disbanding the Iraqi military and removing former members of Iraq's ruling Baath Party.

Missouri Democrat William Lacy Clay.

REP. LACY CLAY (D), Missouri: One of your first official acts was to disband the Iraqi military. Do you regret making that decision? Will you now admit that your de-Baathification program helped to set the stage for the takeover of Iraqi politics by Shiite politicians with close ties to Iran?

PAUL BREMER: The Iraqi army was the army that suppressed the Shia uprising in 1991 in the south and killed hundreds of thousands of Shia. The Kurds and the Shia make up about 80 percent of Iraq's population. They were both cooperating with the occupation.

To have recalled the army would have risked the continued cooperation of 80 percent of the Iraqi people and, I think, led to the secession of the Kurds from Iraq. It would have been a disastrous decision.

So I stand by the decision not to recall the army and to rebuild the army from the bottom up. The mistake I made -- and I admit it -- is, when we announced that we were going to build the new army, we should have immediately said we were also going to pay the officers from the old army.

Now, de-Baathification -- the Baath Party was the primary instrument of political oppression. We decided to take a very modest cut at saying the top 1 percent only of the Baath Party should no longer be allowed to have a public job. That's all it said. It was a very modestly drawn policy.

The mistake I made was letting the Iraqi politicians implement it. And they broadened it way out. So it was the right policy poorly implemented.

JUDY WOODRUFF: Tomorrow, the committee will hold another hearing on Iraq reconstruction, this time focusing on private contractors.